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WPC ’14: Shutdowns drive innovation, growth for Europe’s polyolefins producers

03.27.2014  |  Ben DuBose,  Hydrocarbon Processing, 

Europe’s polyolefins industry has strengthened in recent years as inefficient, high-cost capacity has been forced to shut down and producers have targeted innovation, a leading consultant said.

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By BEN DuBOSE
Online Editor

HOUSTON -- Europe’s polyolefins industry has strengthened in recent years as inefficient, high-cost capacity has been forced to shut down and producers have targeted innovation, a consultant with IHS Chemical said on Thursday.

“Companies are becoming more innovative in their quest to remain viable,” said Nick Vafiadis, senior director of global polyolefins and plastics with IHS Chemical. He spoke at the IHS World Petrochemical Conference, held at the Hilton Americas in downtown Houston.

Examples he cited were recent decision from INEOS and Italy’s Versalis to import cheaper shale-derived ethane from the US as feedstock for European crackers.

Additionally, he noted a new emphasis in Europe on specialty products like metallocenes, with producers moving from commodity grades that are becoming increasingly supplied by lower-cost Middle East producers.

The somewhat positive outlook for European producers did not come without some cautionary tales. For example, Iranian imports are set to return to the market this year, potentially adding to competition.

Meanwhile, the European Union (EU) is striving to reduce its single-use plastic bags by 80% in six years.

Because of those factors, European operating rates are expected to remain below 80%, even after a wave of rationalization in recent years.

Nonetheless, the outlook appears brighter now than it was a year or two ago, he said -- and innovation holds the key.

“Innovation improves margins, stimulates demand, and creates competition,” he said.

The IHS World Petrochemical Conference concludes on Thursday afternoon.



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